Rover seeks to soothe worried dealers

MG Rover has written to its network of dealers in an effort to reassure them that its proposed joint venture with Shanghai Automotive Industry Corporation will be finalised soon and provide a secure future.

A letter signed both by MG Rover chief executive Kevin Howe and the president of SAIC explains to dealers that their current agreements with the Longbridge-based manufacturer will be replaced by agreements with the proposed joint venture on identical terms.

MG Rover conceded that the letter was intended both to give dealers information about the legal changes required under the proposed deal, and to calm fears about its details. Dealers have been concerned about the future, and the impact that insecurity at Longbridge has had on the residual value of Rover cars.

In recent weeks, it has become clear that the joint venture will result in several thousand job losses, and will involve an upfront payment of only a fifth of the £1 billion figure indicated by MG Rover last year.

The future of Longbridge will not be formally guaranteed, although there is an expectation that cars from the anticipated range of four new models will be built there. Rover's share of the main joint venture will be 30 per cent, while SAIC will take some 56 per cent and a third partner, Nanjing Automotive, will have 14 per cent.

An MG Rover spokesman said: 'This period leading up to the deal has clearly affected the confidence of our dealers. They read about 3,000 job losses, or 2,000 job losses, and there have been concerns; and we recognise that.'

Dealers themselves appear to be reassured by the letter, which talks of the network working together with the company towards an exciting future. Manchester-based Richard Cort, chairman of the MG Rover Franchise Board, the dealers' association, said: 'My genuine feeling about this is positive.'